Who needs disability insurance?
You probably have heard the term “renters insurance” bandied about pretty frequently. But like everyone else, you are busy and it never seems to make it to the top of your priority list. You are a renter and you know what insurance means, but you are at a loss to describe what renters insurance covers. Here is an easy list of FAQs to help you learn quickly.
What Is Renters Insurance Exactly
Renters insurance covers your belongings in a rental apartment or storage unit. If your belongings are stolen, damaged, or lost you can submit a claim to your insurance company.
This is usually where an understanding of renters insurance ends. However, renters insurance covers more than just property loss. It also covers the cost of injuries that occur in your rented space. This is important if the injured party decides to sue you. Depending on your policy terms, the insurance may pay for your legal defense.
Can Your Landlord Demand You Carry Renters Insurance
Yes. They can write the requirement into your rental contract. Renters insurance covers liability for renter and landlord.
What is the Difference Between Actual Cost Value and Replacement Cost Value Policies
Actual cash value policies cover your belongings at market value. Depreciation enters into the cost value of any destroyed or stolen possessions. In other words, if your five-year-old couch happened to be stolen (why it would be is a mystery), the amount of money your insurance company would pay for the claim would not equal the amount you purchased it for, but instead, the depreciated cost after five years of use.
Replacement cost value policies cover the amount a claim would pay for an item as if it were brand new. In other words, replacement cost usually equates to the original amount paid for an item.
What Are the Downsides of Buying Renters Insurance
The cost of those darn premiums is one downside. All types of insurance require premiums. And think of it like car insurance. If you never need to collect on it, you are paying a monthly expense you never get back. However, renters insurance is a choice, not a legal mandate like car insurance.
The cost of those darn deductibles is another downside. All types of insurance require deductibles. A deductible is the amount of money paid before insurance “begins” coverage. So, if all you own is a huge flat screen television costing $12,000 and your deductible is $12,000, insurance may not be worth it. Remember, lower deductibles usually mean higher premiums. Even though a stolen flat screen wouldn’t be paid for with a $12,000 deductible, you still have the liability coverage renters insurance provides.
To Buy or Not to Buy
Whether you purchase renters insurance or not is a personal financial decision that must take into account your possessions, your risk tolerance, your general philosophy on insurance coverage, and the consideration of liability.
As with any type of insurance coverage, you need to do your homework first.
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